Market Objectives and Strategies
Category: Marketing
Corresponding to the Competitive Triangle we will have some basic competitive strategies in the market place in relation to markets and competitors.
Competitive advantages can be obtained in two fundamentally different ways:
Lower costs where a company seeks to become the supplier in the business who produces at the lowest cost
Differentiation where a company seeks to differentiate its product from the other suppliers in the business because the product has characteristics of special value to the buyers
The access to the market can, also, be characterised in two fundamentally different ways:
The entire market where the company seeks to realise its competitive advantages in the entire market width, that is in the largest possible number of segments
Parts of the market where the company focuses on a limited number of market segments where it sees an advantage in realising the competitive advantages chosen
The two fundamental competitive advantages available, combined with the two alternative approaches to the market, result in the following potential positions:
The company’s basis of competition should be based on the two following questions:
What strategy complies with the company’s resources (i.e. structure)?
What strategy would be the most difficult for the competitors to meet and adapt to (i.e. basis of competition)
In the following, each of the five strategies are discussed:
Shipbuilding yards can be mentioned as an example of chosen strategies within competition areas and competition advantages. South Korean shipbuilders are often cost-leaders, who produce many different types of ships of good but not high quality. They are produced at lower costs than at Japanese shipbuilding yards. Chinese shipbuilders often chose a cost-focus strategy. Only a few types of ships of relatively low technological standard are produced but at the same time at the lowest market price. The Japanese shipbuilders offer, at an additional price, many different types of ships which are valued as ships of high quality. This is a typical differentiation strategy. Scandinavian shipbuilders often build special types of ships (ice-breakers, cruisers, etc.) fulfilling, at an additional price, special demands for quality techniques and labour. These shipbuilding yards have therefore chosen a differentiation-focus strategy.